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FAQ

Frequently Asked Questions

Who owns a credit union?

Most financial institutions are owned by stockholders, who own a part of the institution and intend on making money from their investment. A credit union doesn't operate in that manner. Rather, each credit union member owns one "share" of the organization. The user of credit union services is also an owner, and is even entitled to vote on important issues, such as the election of member representatives to serve on the board of directors.

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What is the purpose of a credit union?

The primary purpose in furthering their goal of service is to encourage members to save money. Another purpose is to offer loans to members. In fact, credit unions have traditionally made loans to people of ordinary means. Credit unions can charge lower rates for loans (as well as pay higher dividends on savings) because they are nonprofit cooperatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.

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Who can join a credit union?

A credit union exists to serve a specific group of people, such as a group of employees or the members of a professional or religious group. This is called a "field of membership." The field of membership may include where they live, where they work, or their membership in a social or economic group.

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What's a Credit Union?

A credit union is a cooperative, not-for-profit financial institution organized to promote thrift and provide credit to members. It is member-owned and controlled through a board of directors elected by the membership. The board serves on a volunteer basis and may hire a management team to run the credit union. The board also establishes and revises policy, sets dividend and loan rates, and directs certain operations. The result: members are provided with a safe, convenient place to save and borrow at reasonable rates at an institution which exists to benefit them, not to make a profit.

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How did credit unions start?

The first credit union cooperatives started in Germany over a century ago. Today, credit unions are found everywhere in the world. The credit union movement started in this country in Manchester, New Hampshire. There, the St. Mary's Cooperative Credit Association, a church-affiliated credit union, opened its doors in 1909. Today, one in every three Americans is a credit union member.

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Are savings deposits insured?

The Emergency Economic Stabilization Act of 2008 increased the insurance coverage on all accounts up to $250,000 until December 31, 2009. Your share savings funds are insured up to $250,000 per Social Security Number, for non-IRA (Individual Retirement Accounts) accounts and up to $250,000 for IRA accounts through NCUA's National Credit Union Share Insurance Fund (NCUSIF), an agency of the Federal Government. Share accounts in federally insured credit unions are insured up to the Standard Maximum Share Insurance Amount (SMSIA), $250,000 as of October 3, 2008. For more information regarding how your shares are insured by the NCUSIF, click here.

NCUA has a Share Insurance Estimator on its web site to help members better understand the protection offered by the NCUSIF. View the Share Insurance Estimator, click here.

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